Offshore Impetus Comes To Fore In Whipsaw Session

Greenback gyrations associated with U.S. CPI data & Fed repricing were the primary driver of NZD/USD on Thursday. The rate went offered as data showed that U.S. inflation figures beat expectations, ramping up pressure on the Fed to act swiftly. Demand for the greenback dissipated and NZD/USD bounced into the WMR fix, but it pulled back again as Fed's Bullard flagged the need for 100bp worth of rate increases by July, expressed support for a 50bp hike and raised the prospect of an inter-meeting rate rise.

• NZD/USD trades at $0.6667 at typing, down 6 pips on the day. Bears need a sell-off past Feb 4 low of $0.6590 before setting their sights on Jan 28 cycle low of $0.6530. Meanwhile, a clearance of yesterday's high of $0.6733 would expose Jan 19 high of $0.6812.
• New Zealand government confirmed that from April 1 the minimum wage will increase by 6% to NZ$21.20/hour, virtually matching the annual rise in consumer prices recorded in 4Q2021. The minimum wage hike is above what had been recommended by the Ministry of Business, Innovation and Employment in November, who back then warned that an increase above NZ$21/hour "may become unaffordable for some firms."
• Expansion in New Zealand's manufacturing sector slowed a tad in January, according to the latest BusinessNZ Manufacturing PMI survey. Headline index slipped to 52.1 from 53.8 recorded a month before, while BNZ noted that the "results feel like something of a place holder before Omicron hits proper over coming months along with anticipated higher rates of absenteeism and disruption."
• Quarterly consumer inflation expectations headline the domestic docket during the remainder of the day. Next week's data highlights include Services PMI (Monday), REINZ House Sales (Tuesday) & PPI (Friday).